CAD/PKR Outlook:
The CAD/PKR outlook is slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a clear driver.
Key drivers:
- Rate gap: The Bank of Canada’s cautious monetary policy contrasts with the challenges facing the State Bank of Pakistan, contributing to CAD strength.
- Risk/commodities: Rising oil prices, trading at higher levels than in recent months, could support the CAD, given Canada’s status as a leading oil exporter.
- Macro factor: Ongoing geopolitical tensions and trade disruptions have significantly pressured the PKR, leading to depreciation against major currencies.
Range:
The CAD/PKR is likely to hold within the recent range, as fluctuations are expected but without substantial movement towards the extremes.
What could change it:
- Upside risk: A sharp increase in global oil prices could boost the CAD further.
- Downside risk: Continued geopolitical tensions and economic instability in Pakistan could weaken the PKR further against the CAD.